Credit cards offer a variety of benefits over debit cards and cash. The key is to remain disciplined with your spending, or you could get into financial difficulties, otherwise they can offer some great benefits for just buying goods on credit.
According to the Australian Banking Association Inc., about 40% of adults have a credit card. This percentage is understandable once you see the benefits of using a credit card.
Easy and fast payments
With credit cards, payments are easy, in store and online, but also accepted locally and internationally and payments can be converted to local currencies. These payments reflect instantly on yours and the seller’s account, and you will not be charged a transaction fee. More so, credit cards allow you greater convenience than other payment methods. For example, you don’t need to pay upfront at some car rental companies as you can give your credit card details and then pay when you return the car.
Rewarded for spending
With around 193 credit card products, 67 providers, it means that Australia’s credit card sector has a healthy competition. Furthermore, with credit card companies making their money out of transaction fees charged to traders, they want you to spend so they offer incredible rewards. The key though is to get a card that matches with your lifestyle, so you can reap the benefit, but don’t go spending just to get points. Depending on the type of card, the rewards can vary from free flights on specific airlines to 1% – 5% cash back on purchases made.
Improve credit scores
Cash and debit cards do not build credit, but a credit card does, as there is a history of your spending. Then if you want to apply for a loan, and your credit card history is healthy, you will be in a great place of getting a loan and getting a better interest rate.
With around 16 725 534 credit cards in circulation in Australia, with about 22 8598 000 transactions monthly, fraudsters are lurking. More so, there has been an increase of the overall amount of fraud on cards in Australia from $461 million to $534 million in 2016. However, unlike debit cards or cash, if your credit card is stolen you will have the benefit of fraud protection.
You will get a detailed list of all the items you bought that month. You can use this list to manage your budget better. By having such a list will show you where you are spending your money, which is not so easy to do when you work with cash.
Emergency lines of credit
Most credit cards offer an interest free period before interest is charged. You can use that to your benefit. For instance, if there is an unexpected cost such as repairing your car, you can charge it to your card knowing that you have a grace period before you need to repay the funds.
Special invites and discounts
Depending on the type of credit card, cardholders can get discounts on hotels, airfares, but also free access to airport lounges, and pre-sale tickets and VIP access to concerts. For example, with Mastercard, some cardholders can get up to 30% discount on flights and hotel costs